[BETA] Fortnightly

HAS DISAGREEMENT BETWEEN STATE HOUSE AND COMmission stalled electric industry restructuring efforts in New York?

Sheldon Silver, speaker of the New York State Assembly, insists the Legislature is busy working on comprehensive restructuring legislation for the state. He has expressed dismay at efforts of the New York Public Service Commission, which is restructuring the industry utility by utility.

Silver believes legislation offers the best chance to introduce competition quickly and efficiently, rather than through multiple, individual restructuring plans. Moreover, there appears to be general agreement in the state on the need for action regarding stranded costs, securitization and the state's gross receipts tax.

In February, at a meeting of financial analysts in New York City, Silver noted that the Association for the Advancement of Retired Persons had withdrawn from restructuring hearings because it had felt the PSC had left the public out of the process. He questioned whether the PSC had "forgotten" the people who pay the bills: "The problem in New York is that there is no one to talk to."

Speaking at the same meeting, then deputy PSC chairwoman Maureen Helmer had disagreed, defending the commission's piecemeal process, built around decisions in individual cases.

Last month, however, the outlook may have shifted, as the republican PSC chairman John O'Mara announced he would resign from the commission effective April 15. That move gave Gov. George Pataki the opportunity to name Helmer the new PSC chair, plus appoint a new commissioner to serve out the remainder of O'Mara's term, which expires on Jan. 31, 1999.

Battling Over Tactics

One problem New York must overcome to develop legislation, says Helmer, is the patchwork of energy "mistakes," across New York state, "Many of which have been caused by government."

This patchwork has led to rate disparities and other concerns. For example, the problems of Niagara Mohawk Power Corp. in dealing with independent power producers varied greatly from the task that faced Long Island Lighting Co. in unloading the Shoreham nuclear plant. The PSC did not require LILCO to file a restructuring plan. Instead, LILCO's electric customers should see savings through (1) the company's transfer of its Shoreham plant and transmission and distribution assets to Long Island Power Authority, and (2) LILCO's merger with Brooklyn Union Gas Co., which will send LILCO's remaining non-nuclear generating assets to KeySpan Energy Services Corp., the holding company for Brooklyn Union.

On April 22, the New York Public Authority Control Board authorized up to $5.23 billion in tax-exempt bonds for the takeover, after the LIPA board had OK'd an immediate 20 percent rate cut for former LILCO customers on April 9. Seth Hulkower, executive director of LIPA, who confirmed the PACB action, says the takeover should take place toward the end of May or early June.

In fact, the PSC approved the LILCO/Brooklyn merger effective April 14. The settlement promises savings of 3.21 percent for LILCO electric customers through credits for reductions in base rates. (Case 97-m-0567, Opinion No. 98-9, April 14, 1998.)

"The PSC cannot solve these situations by saying that all customers should have a rate cut